Questions & Answers

What is use tax?

Use tax is owed on an out-of-state purchase if the purchase would be subject to North Carolina sales tax if bought in North Carolina, and the retailer making the sale either does not collect sales tax or the sales tax collected is less than what it would be if bought in North Carolina.

Out-of-state retailers that are not "engaged in business" in North Carolina are not required to collect North Carolina tax. However, some out-of-state retailers voluntarily collect North Carolina tax as a convenience to their customers. Out-of-state retailers include mail-order companies, television shopping networks, firms selling over the internet, and other retailers.

Essentially if you bought something online and paid sales tax for it, then you don't have to pay use tax. But if you bought something online and paid no sales tax, then you used it in North Carolina, you need to pay use tax on the item at the sales tax rate.

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